Federal Register / Vol. 63, No. 124 / Monday, June 29, 1998 / Notices 35239

DEPARTMENT OF HEALTH AND

HUMAN SERVICES

Health Care Financing Administration

[Document Identifier: HCFA–R–227]

Agency Information Collection

Activities: Submission for OMB

Review; Comment Request

AGENCY: Health Care Financing

Administration, HHS.

In compliance with the requirement

of section 3506(c)(2)(A) of the

Paperwork Reduction Act of 1995, the

Health Care Financing Administration

(HCFA), Department of Health and

Human Services, is publishing the

following summary of proposed

collections for public comment.

Interested persons are invited to send

comments regarding this burden

estimate or any other aspect of this

collection of information, including any

of the following subjects: (1) The

necessity and utility of the proposed

information collection for the proper

performance of the agency’s functions;

(2) the accuracy of the estimated

burden; (3) ways to enhance the quality,

utility, and clarity of the information to

be collected; and (4) the use of

automated collection techniques or

other forms of information technology to

minimize the information collection

burden.

Type of Information Collection

Request: Extension of a currently

approved collection; Title of

Information Collection: Research and

Analytic Support for Implementing

Performance Measurement in Medicare

Fee for Service; Form No.: HCFA-R–227

(OMB# 0938–0718); Use: As required by

the Balanced Budget Act (BBA), Section

1851(d), the Health Care Financing

Administration (HCFA) needs to

develop comparable performance

measures for Fee For Service (FFS)

Medicare. This project will enable

HCFA to evaluate the effectiveness and

outcomes of FFS services purchased.

HCFA may potentially disseminate this

information to Medicare beneficiaries so

that they may make informed health

care choices; Frequency: Biennially;

Affected Public: Individuals or

Households, Business or other for-profit,

Not-for-profit institutions, Farms,

Federal Government, and State, Local or

Tribal Government; Number of

Respondents: 6,670; Total Annual

Responses: 6,670; Total Annual Hours:

2,223.

To obtain copies of the supporting

statement and any related forms for the

proposed paperwork collections

referenced above, access HCFA’s Web

Site address at http://www.hcfa.gov/

regs/prdact95.htm, or E-mail your

request, including your address, phone

number, OMB number, and HCFA

document identifier, to

Paperwork@hcfa.gov, or call the Reports

Clearance Office on (410) 786–1326.

Written comments and

recommendations for the proposed

information collections must be mailed

within 30 days of this notice directly to

the OMB desk officer: OMB Human

Resources and Housing Branch,

Attention: Allison Eydt, New Executive

Office Building, Room 10235,

Washington, DC 20503.

Dated: June 22, 1998.

John P. Burke III,

HCFA Reports Clearance Officer, HCFA Office

of Information Services, Security and

Standards Group, Division of HCFA

Enterprise Standards.

[FR Doc. 98–17154 Filed 6–26–98; 8:45 am]

BILLING CODE 4120–03–P

DEPARTMENT OF HEALTH AND

HUMAN SERVICES

Health Resources and Services

Administration

Notice Regarding Section 602 of the

Veterans Health Care Act of 1992—

Rebate Option

AGENCY: Health Resources and Services

Administration, HHS.

ACTION: Final notice.

SUMMARY: Section 602 of Pub. L. 102–

585, the ‘‘Veterans Health Care Act of

1992,’’ enacted section 340B of the

Public Health Service (PHS) Act,

‘‘Limitation on Prices of Drugs

Purchased by Covered Entities.’’ Section

340B provides that a manufacturer who

sells covered outpatient drugs to eligible

entities must sign a pharmaceutical

pricing agreement with the Secretary of

HHS in which the manufacturer agrees

to charge a price for covered outpatient

drugs that will not exceed that amount

determined under a statutory formula.

The purpose of this notice is to inform

interested parties of the final guidelines

recognizing a rebate option for State

AIDS Drug Assistance Programs

(ADAPs) receiving funds under Title

XXVI of the PHS Act as an optional

alternate means of accessing section

340B discount pricing.

EFFECTIVE DATE: July 29, 1998.

FOR FURTHER INFORMATION CONTACT:

Robert Staley, R. Ph., Senior Program

Manager, Office of Drug Pricing, Bureau

of Primary Health Care, Health

Resources and Services Administration,

4350 East-West Highway, Bethesda, MD

20814, Phone (301) 594–4353; Fax (301)

594–4982.

SUPPLEMENTARY INFORMATION:

(A) Background

The proposed guidelines, recognizing

a rebate option for State AIDS Drug

Assistance Programs (ADAPs), were

announced in the Federal Register at 62

FR 45823 on August 29, 1997. A period

of 30 days was established to allow

interested parties to submit comments.

The Department received comments

from eleven sources including State

AIDS Drug Assistance Programs,

pharmaceutical manufacturers, and

organizations representing

pharmaceutical manufacturers or

covered entities. Ten commenters

supported the proposed guideline.

There were no comments strongly in

opposition to the recognition of an

ADAP rebate option. The following

section presents a summary of all major

comments, grouped by subject, and a

response to each comment. All

comments were considered in

developing these final guidelines. The

rebate option is adopted with several

modifications based upon these

comments.

(B) Comments and Responses

Standardization of Systems

Comment: It is hoped that the

guideline will ensure a rebate process

similar to the Medicaid model and

voluntary systems currently utilized by

most drug companies in that such

standardization will ensure a more

efficient rebate system.

Response: The Federal Register notice

requested comments only on the

recognition of a rebate option and did

not propose a specific mechanism for

accessing such rebates. State ADAPs

and manufacturers are encouraged to

follow standard business practices in

designing the contracts and agreements

for such a rebate mechanism. The

voluntary rebate agreements and the

Medicaid rebate program may be used

as models for development of the ADAP

rebate agreements. The process for claim

submission and payment is expected to

be similar. The stipulations found in 59

FR 25113, May 13, 1994, section XI,

entitled ‘‘Manufacturer’s Contracts

Requiring Entity Compliance’’ are also

deemed to be applicable in that a

manufacturer may not condition a

rebate contract or agreement upon an

entities’ compliance with the provisions

of section 340B. Manufacturer

stipulated requirements for

participation in the manufacturer

designed voluntary rebate agreements, if

predicated on section 340B compliance,
35240 Federal Register / Vol. 63, No. 124 / Monday, June 29, 1998 / Notices

should be renegotiated for the section

340B rebate agreements.

Comment: Guidelines should allow

State ADAPs with negotiated voluntary

rebate agreements to continue to

provide utilization data according to the

terms of existing agreements.

Response: Voluntary rebate

agreements with covered entities that

provide at least the minimum statutory

discount and do not contain

requirements inconsistent with section

340B and published program guidelines

will be considered consistent with the

section 340B rebate program. State

ADAPs may not need to negotiate new

agreements if these conditions are met,

and the ADAP or the manufacturer does

not desire a new agreement. ADAPs may

continue to provide utilization data

according to terms of existing

agreements if so desired.

Comment: Unlike the Medicaid rebate

program, the proposed rebate program

lacks specificity regarding program

provisions and safeguards. It is critical

that standardized contracts that provide

for efficient and accountable

procedures, systems, and data reporting

formats be defined and implemented in

conjunction with the program. The

purpose of these provisions would be to

protect the integrity of the program by

safeguarding against errors,

misunderstanding, and the potential for

duplicate discounts and rebates.

Response: This notice only recognizes

an ADAP rebate option and does not

provide in-depth implementation

strategies. Standard business practices

should be utilized by State ADAPs and

manufacturers. The mechanisms

developed and used in the Medicaid

rebate program and the current

voluntary rebate programs (consistent

with the requirements of section 340B

and program guidelines) are models to

be emulated. Of course, a 340B discount

and a Medicaid rebate on the same

covered drug are prohibited by section

340B.

Comment: The HRSA draft guidance

does not address the mechanics of

communication between an ADAP and

a manufacturer about drugs reimbursed

by the ADAP for which it claims a

rebate from a manufacturer. It is

recommended that HRSA consider

requiring the ADAPs to use the claim

form that State Medicaid programs use

in submitting rebate requests to

manufacturers.

Response: The Federal Register notice

did not address the mechanics of the

rebate process. However, ADAPs are

encouraged to use Medicaid claim form

HCFA–R–144 as a model for two

reasons. First, this form can be

considered a standard business practice

model. Second, manufacturers should

find it advantageous to receive rebate

claims from State ADAPs in a similar

form and format to that received from

the State Medicaid programs.

Diversion and Duplicate Discounts

Comment: The State ADAP and the

manufacturer are able to avoid the

problems of diversion and double

discounting if both the ADAP and the

manufacturer have reached an

understanding concerning the

arrangements the ADAP has made to

meet its statutory obligations (to avoid

diversion and claims resulting in a

duplicate discount).

Response: Guidelines have been

issued to minimize the potential for

duplicate discounting and covered drug

diversion (59 FR 25110, May 13, 1994),

and manufacturers have available to

them auditing and dispute resolution

remedies if they believe that duplicate

discounting or covered drug diversion

has occurred (61 FR 65406, December

12, 1996). In addition, manufacturers

and covered entities are referred to 59

FR 25113 for a reminder that ‘‘a

manufacturer may not condition the

offer of statutory discounts upon an

entity’s assurance of compliance with

section 340B provisions.’’

Comment: It would be difficult to

administer a rebate program in which a

given State ADAP used both the

discount option and the rebate option.

HRSA should clarify the policy that the

rebate option is an ‘‘alternate to’’ the

direct discount mechanism and the

choice of a single mechanism should be

made by each State ADAP. We urge that

HRSA clarify that the ADAP rebate is

available only for those drugs not

purchased at the PHS (section 340B)

discount. Additionally it is

recommended that HRSA maintain a list

of which option has been selected by

each ADAP.

Response: The State ADAP 340B

rebate option is an alternate method of

accessing 340B pricing developed by

HRSA in response to a clear need by

certain State ADAPs which are unable

to access such pricing through the direct

discount option. We anticipate that

these State ADAPs will promptly begin

accessing 340B pricing using this rebate

option. However, in States which have

decentralized drug purchasing, there is

the possibility that some decentralized

ADAP components may elect to access

pricing through a rebate mechanism

while other ADAP components may

develop systems to access a direct

discount. States with decentralized drug

purchasing are encouraged to centralize

drug reimbursement mechanisms, so

that from this central location, they can

effectively maintain the necessary

records to document appropriate drug

reimbursement activity for the entire

State. Using this drug reimbursement

documentation, the central ADAP can

then monitor reimbursement activity

and prevent any duplicate rebate/

discount on the same drug. In addition,

the centralized ADAP can request

appropriate rebates from the

manufacturers in a more efficient and

reliable manner. A State ADAP

participating in the State ADAP section

340B rebate program will be listed as a

covered entity, Entity Type ‘‘RWIIR.’’

Comment: Under a decentralized

system, it may be difficult to assure that

duplicate discounts will not occur on

drugs provided to Medicaid patients. At

any rate, coordination between the

ADAPs and State Medicaid agencies

will be required.

Response: Section 340B(a)(5)(A)

prohibits a covered entity’s request for

a discount on a drug subject to an

agreement under section 340B if the

drug is subject to the payment of a

rebate under Medicaid. This

requirement applies whether the State

ADAP uses a decentralized system or a

centralized system. The mechanism to

prevent a duplicate discount was

published in the Federal Register on

May 7, 1993 (58 FR 27293). This

mechanism was developed in

consultation with HCFA. In order to

avoid a duplicate discount, the State

ADAP must refrain from billing the

State Medicaid agency unless the

manufacturer’s 340B rebate (either

estimated or actually paid) is deducted

from the price paid by the ADAP. This

will help ensure that the State ADAP

will only bill the State Medicaid agency

at the actual acquisition cost plus a

reasonable dispensing fee established by

the State Medicaid agency. If the

manufacturer’s rebate is different from

the estimated amount, the amounts

billed to the State Medicaid agency will

need to be reconciled.

Manufacturer Participation

Comment: All pharmaceutical

manufacturers whose products are on

any State ADAP formulary should be

mandated to participate in the 340B

rebate program.

Response: Only those manufacturers

that have signed the section 340B

Pharmaceutical Pricing Agreement

(PPA) with HHS must honor appropriate

section 340B rebate requests from

covered entities. The rebate option is a

component of the section 340B program

specific to State ADAPs; therefore,

manufacturers, receiving an appropriate

rebate claim from a covered entity listed

on the Electronic Data Retrieval System
Federal Register / Vol. 63, No. 124 / Monday, June 29, 1998 / Notices 35241

(EDRS) as a State ADAP participating in

the section 340B rebate program, are

required to provide a rebate that meets

or exceeds the 340B discount.

Manufacturers who do not provide a

rebate will be considered out of

compliance with the PPA.

Technical Comments and Contractual

Agreements

Comment: The notice does not detail

the way in which State ADAPs would

or should invoice manufacturers for

rebates. For example, there are no

statements on determination of actual

units utilized during a specific period of

time or a statement as to the time frame

in which an ADAP must submit

invoices.

Response: Standard business practices

should be utilized. A manufacturer and

a State ADAP are encouraged to specify

in a contract or agreement the units and

required time frame for claim data

reporting. Unit definitions for reporting

and report periods similar to those used

in the Medicaid agreements and

voluntary rebate agreements and

contracts are considered standard

business practices and thus acceptable.

A standard State ADAP section 340B

rebate claim submission and processing

guideline was not specified so as to

allow maximum flexibility between a

State ADAP and manufacturers in the

development of contracts and

agreements.

Comment: There is no explicit audit

provision in place to assure that the

amount of units claimed for rebates

coincides with the actual units of

product dispensed. In addition, there is

no specific procedure referenced for

dispute resolution when a manufacturer

disagrees with the amount invoiced

from a State ADAP.

Response: Sections 340B(a)(5)(A) and

(B) prohibit a 340B discount and a

Medicaid rebate on the same drug and

the resale or transfer of a 340B

discounted drug to an individual who is

not a patient of the covered entity. The

manufacturer audit guidelines and the

informal dispute resolution process

guidelines (61 FR 65406–65412,

December 12, 1996) allow

manufacturers to audit covered entities

pursuant to guidelines and dispute,

among other issues, certain covered

entity claims (e.g., rebates for covered

drugs given to individuals who are not

patients of the covered entity).

Comment: Manufacturers must have

the freedom to enter into contractual

agreements with individual State ADAP

programs to address potential problems.

Response: Manufacturers and State

ADAPs are able to enter into contractual

agreements that address potential

problems and mutually acceptable

solutions.

Comment: A comprehensive and

enforceable contract between the State

ADAP program and the manufacturer

should be developed through a public

comment process and implemented

prior to the establishment of the

proposed new rebate mechanism.

Specific elements that should be

incorporated in any such agreement

include: drug National Drug Code

(NDC); prescription number; date

reimbursed; quantity; unit type; amount

reimbursed to the pharmacy; and

dispensing pharmacy name, city, and

state. Absent these provisions, the

guidelines and principles proposed in

the notice are not sufficient to ensure

that the rebate option can operate

equitably and efficiently.

Response: Requiring a

‘‘comprehensive and enforceable

contract’’ would delay State ADAP

participation in the 340B rebate

program. HRSA wishes to allow

maximum flexibility between each

manufacturer and State ADAP in

reaching such agreements.

Pharmacy specific data (prescription

number, date of reimbursement, and

similar data elements) are not reported

on the initial Medicaid utilization

submission and are not considered the

standard for initial claim submission.

HRSA encourages manufacturers to

accept aggregate data (similar to

Medicaid form HCFA–R–144) in the

initial claim form. HRSA encourages

State ADAPs to consider that the more

detailed and accurate the initial claim

data, the less likelihood a claim will be

questioned or disputed.

Comment: We recommend that HRSA

establish a specific date, such as 60 days

after HRSA issues its guidance in final

form, after which drugs reimbursed by

an ADAP would be eligible for a rebate

from a manufacturer with which the

ADAP has entered into a rebate

agreement.

Response: The effective date for the

inception of the State ADAP 340B rebate

program will be 30 days after the date

of publication of this final notice. A

State ADAP will not be considered a

covered entity participating in the 340B

rebate program until it is listed on the

ODP Electronic Data Retrieval System

(EDRS). At maximum, a period of one

hundred and twenty days may elapse

between publication of this final

guideline and the next quarterly update

of the EDRS. State ADAPs listed on the

first quarterly EDRS update after the

publication of this final notice may

submit claims for covered drugs that

were purchased 30 days after the date of

final notice publication and thereafter.

State ADAPs listed on a later EDRS

update may claim rebates only on

purchases made after their effective date

of listing on the EDRS. ADAPs may

need time to work closely with their

State Medicaid programs to develop

procedures to prevent duplicate

discounting. Some ADAPs may find it

necessary to improve record keeping

and data tracking systems.

Comment: We recommend that HRSA

establish a time period within which

claims may be submitted for a

manufacturer rebate. A fixed filing

deadline will help avoid disputes and

the Medicaid model may provide an

analogy wherein Medicaid providers

have one year in which to submit claims

for reimbursement to state Medicaid

programs. The benefit of a uniform

expectation about the finality of

payments and disputes for a given

period may outweigh any concerns

about HRSA imposing requirements on

ADAPs.

Response: HRSA agrees that a

maximum time period for submission of

claims of one year appears to be within

the range of standard business practices.

However, a specific guideline for data

claim submission and processing for

rebates is not included in this guideline.

Comment: We urge HRSA to adopt

requirements that manufacturer rebates

paid to a State ADAP expand the care

provided by the ADAP.

Response: Although section 340B

does not discuss an appropriate use for

340B drug purchasing savings, the

legislative history provides that section

340B was enacted to permit scarce

Federal dollars to reach more eligible

patients and provide more

comprehensive services. See H.R. Rep.

No. 102–348, 102d Cong., 2d Sess., pt 2,

at 16 (1992).

Expansion of the Rebate Option to

Additional Covered Entities

Comment: The characteristics of State

ADAPs and their components make

them more like State-run

pharmaceutical benefit programs. The

commitment of the States to assume

responsibility for rebate contracting and

administration has been essential to

making the voluntary rebate program

manageable. Our (favorable) response to

the recognition of a rebate program for

the ADAPs would be different if HRSA

proposed a rebate program for all

covered entities. Accordingly, we urge

that the rebate mechanism be an option

only for meeting the unique needs of the

State ADAP programs and that HRSA

not consider any further expansion to

other categories of entities.

Response: At this time, we agree. This

notice only recognizes a rebate option
35242 Federal Register / Vol. 63, No. 124 / Monday, June 29, 1998 / Notices

for the State AIDS Drug Assistance

Programs that receive assistance under

Title XXVI of the PHS Act.

(C) The State ADAP Section 340B

Rebate Option

In light of the comments and

responses set forth above, the guideline

for the state ADAP 340B rebate option

is as follows: HRSA recognizes rebates

obtained by the State ADAPs or their

components that equal or exceed the

340B discount provided by the statutory

ceiling price as a method of

participating in the 340B program,

subject to compliance with other

requirements for participation. Standard

business practices, such as those

reflected in the Medicaid Rebate

Program and current voluntary

manufacturer rebate programs

(consistent with the requirements of

section 340B and all program guidance

published in the Federal Register) are

appropriate for the development of

rebate contracts and agreements

between State ADAPs and

manufacturers. State ADAPs or their

components and manufacturers wishing

technical assistance in developing a

rebate program and rebate agreements

should contact HRSA’s Office of Drug

Pricing at (301) 594–4353 or (800) 628–

6297.

State ADAPs or their components

determined to be eligible for

participation in the State ADAP 340B

rebate program will be listed on the

Office of Drug Pricing (ODP) Electronic

Data Retrieval System (EDRS) on the

first quarterly update of the EDRS which

occurs 30 days following the effective

date of this Federal Register notice.

State ADAPs or their components listed

on this update may submit rebate claims

to participating manufacturers for

covered drugs that are purchased

starting 30 days after the date of this

final notice publication. State ADAPs or

their components listed on a later EDRS

update may claim rebates only on

purchases made after their effective date

of listing on the EDRS.

Section 340B(a)(5)(A) reflects

Congressional recognition that there is a

potential for a covered drug purchased

by a covered entity at the 340B discount

price to be subject to a Medicaid rebate,

if the drug is reimbursed by the

Medicaid program. All program

guidance regarding the prevention of

such duplicate discounting must be

followed by ADAPs participating in the

rebate program as well as those

participating in the discount program.

Guidance regarding billing State

Medicaid Agencies at actual acquisition

cost plus a dispensing fee (established

by the State Medicaid agency) and the

prevention of duplicate discounting was

published in the Federal Register on

May 7, 1993 (58 FR 27293) entitled

‘‘Duplicate Discounts and Rebates on

Drug Purchases.’’ Further guidance was

published in the Federal Register on

May 13, 1994 (59 FR 25112). State

ADAPs may find it necessary to work

with State Medicaid Agencies to adapt

these guidelines to meet the unique

circumstances of each individual State,

such as provisions permitting

retroactive reimbursement of drug

purchases while Medicaid eligibility

was pending.

The HRSA is sensitive to concerns

about diversion of covered drugs to

individuals who are not patients of the

covered entities. Guidelines have been

issued to minimize this potential, and

manufacturers have available to them

specified remedies if they believe

diversion has occurred. These

guidelines and remedies will apply fully

to drugs purchased under a rebate

option, and we believe that instituting

rebates will not increase the potential

for diversion.

Dated: May 22, 1998.

Claude Earl Fox,

Administrator.

[FR Doc. 98–17142 Filed 6–26–98; 8:45 am]

BILLING CODE 4160–15–P

DEPARTMENT OF HEALTH AND

HUMAN SERVICES

National Institutes of Health

Notice of Establishment of the

Secretary’s Advisory Committee on

Genetic Testing

Pursuant to the Federal Advisory

Committee Act, as amended (5 U.S.C.

Appendix 2), the Director, National

Institutes of Health (NIH), announces

the establishment of the Secretary’s

Advisory Committee on Genetic Testing

(Committee).

This Committee will advise the

Secretary of Health and Human Services

on all aspects of the development and

use of genetic tests, including making

recommendations on policies and

procedures for the safe and effective

incorporation of genetic technologies

into health care; assessing the

effectiveness of existing and future

measures for oversight of genetic tests;

and identifying research needs related

to the Committee’s purview.

Unless renewed by appropriate action

prior to its expiration, the charter for the

Secretary’s Advisory Committee on

Genetic Testing will expire two years

from the date of establishment.

Dated: June 22, 1998.

Harold Varmus,

Director, National Institutes of Health.

[FR Doc. 98–17168 Filed 6–26–98; 8:45 am]

BILLING CODE 4140–01–M

DEPARTMENT OF HEALTH AND

HUMAN SERVICES

National Institutes of Health

National Cancer Institute; Notice of

Closed Meeting

Pursuant to section 10(d) of the

Federal Advisory Committee Act, as

amended (5 U.S.C. Appendix 2), notice

is hereby given of the following

meeting.

The meeting will be closed to the public

in accordance with the provisions set forth in

sections 552b(c)(4) and 552b(c)(6), Title 5

U.S.C., as amended. The grant applications

and the discussions could disclose

confidential trade secrets or commercial

property such as patentable material, and

personal information concerning individuals

associated with the grant applications, the

disclosure of which would constitute a

clearly unwarranted invasion of personal

privacy.

Name of Committee: National Cancer

Institute Initial Review Group Subcommittee

D—Clinical Studies.

Date: August 2–5, 1998.

Time: 7:00 p.m. to 6:00 p.m.

Agenda: To review and evaluate grant

applications.

Place: Holiday Inn—Silver Spring, 8777

Georgia Avenue, Silver Spring, MD 20910.

Contact Person: Martin H. Goldrosen, PhD,

Scientific Review Administrator, Grants

Review Branch, Division of Extramural

Activities, National Cancer Institute, National

Institute of Health, 6130 Executive

Boulevard, Rm. 635F, Rockville, MD 20852–

7405, (301) 496–7930.

(Catalogue of Federal Domestic Assistance

Program Nos. 93.392, Cancer Construction;

93.393, Cancer Cause and Prevention

Research; 93.394, Cancer Detection and

Diagnosis Research; 93.395, Cancer

Treatment Research; 93.396, Cancer Biology

Research; 93.397, Cancer Centers Support;

93.398, Cancer Research Manpower; 93.399,

Cancer Control, National Institutes of Health,

HHS)

Dated: June 23, 1998.

LaVerne Y. Stringfield,

Committee Management Officer, NIH.

[FR Doc. 98–17172 Filed 6–26–98; 8:45 am]

BILLING CODE 4140–01–M